(MENAFN - ProactiveInvestors - Australia) Papua New Guinea focused Oil Search (ASX: OSH) has formed a partnership with Total that marks the entry of the French supermajor into the country and could result in a liquefied natural gas development for the onshore and offshore Gulf of Papua region.
The Papua New Guinea specialist has signed Sale and Purchase Agreements that give Total, one of the top six oil companies in the world, an equal stake in five licences in return for reimbursement of past licence costs and a partial carry through an initial offshore drilling programme and the acquisition of seismic in the onshore licences.
Oil Search may also receive success-based cash payments and a partial carry through up to seven exploration and appraisal wells in the offshore licences and up to eight wells in the onshore licences under the contingent component of the deal.
During the exploration phase, Oil Search will continue as operator with support from Total.
In the event of exploration and appraisal success that leads to a liquefied natural gas project, Total would develop and operate the downstream facilities of any development.
The two companies have also agreed to form a strategic partnership to look at other licences in the country, excluding the Highlands area, where Oil Search is already working with ExxonMobil on the PNG LNG project.
Oil Search had acquired substantial 3D seismic in 2011 and 1,050 square kilometres this year over the offshore Gulf.
This resulted in the identification of over 30 opportunities across multiple play types that range in size from 0.5 to 1.5 trillion cubic feet of gas.
It has contracted the Stena Clyde semi-submersible drilling rig to drill two wells with two options from January 2013.